About 150 truck drivers from Eastern and Central Europe have found themselves stranded and penniless all over Europe after Luxembourg authorities arrested the Austrian owner of the trucking firm that hired them. RFE/RL correspondent Don Hill reports the truckers illustrate the fallout in the EU of a gray-market economy -- illegal workers, unpaid taxes, and unfair competition.

Prague, 6 February 2002 (RFE/RL) -- The European Union's gray-market economy emerged out of the shadows last week. Luxembourg authorities detained Austrian Karl Kralowetz two weeks ago on a German warrant charging violation of German labor laws.

One dramatic result was that, last week, 150 or more truck drivers from Albania, Bulgaria, the Czech Republic, Poland, Slovakia, and Ukraine found themselves stranded all over Europe without funds to buy fuel for their trucks or food for themselves. In Luxembourg, the Red Cross and a national trade union helped to feed and lodge about 50 drivers while arrangements were being made to return them home.

As painful as the plight of individual truckers is, the most significant facts about the case are what it may disclose about Europe's gray market -- illegal workers, unpaid taxes, and unfair competition.

A consensus exists within the EU and its business community that the gray market is huge, but up to now, nobody can say how big. Andrew Fielding, the European Commission's spokesperson for employment and social affairs, says that, by their nature, underground business transactions are not easily measured.

Fielding prefers the euphemistic term "informal economy": "There is in the EU a problem in the informal economy. There is too big an informal economy -- full stop."

The gray employment market goes well beyond transport workers. Construction contractors, restaurants and small businesses throughout Europe regularly depend on illegal workers from Central and Eastern Europe. Companies hire workers for low wages, fail to pay taxes and social security, and often exploit employees almost as slave labor.

The transportation industry is among the hardest to monitor. Its employees stay on the move, often through one nation while bearing papers issued under the laws of another with differing requirements.

News reports say that the stranded truckers were employees of United Continent Lines established by Karl Kralowetz in Luxembourg. Kralowetz also is a partner with three brothers in the Austrian trucking firm, Kralowetz GmbhH. Farid Rifaat, a lawyer for the Austrian Kralowetz firm, says the two enterprises are distinct legal entities and should not be confused. He says that any problems encountered by one should be distinguished from the operations of the other.

Rifaat denies that United Continent Lines is a fictitious firm whose purpose is to circumvent the labor laws of various European countries. He says the firm has duly registered its 700 drivers under the unusually liberal labor laws of Luxembourg. However, Hubert Hollerich, general secretary of the Luxembourg union OGBL-Acal, says his union has been complaining to Luxembourg authorities for 12 years that the firm violates labor regulations on social security and taxes.

Gilles Gantelet, spokesman for European Commission Transport Commissioner Loyola di Palacio, says that the responsibility for enforcing EU-wide labor regulations and those of individual countries lies with the countries themselves. Some countries simply fail to do the job, he says.

All the controls of this [transport labor] legislation are the responsibility of the different member states and it seems -- it's not sure but it seems -- that all the possible controls about the good repute of [companies] and those respecting normal national rules, it seems that these controls have not been fulfilled."

He says the European Parliament and Council of Ministers has just adopted a new transport workers' law that will have power and will be easier to enforce.

"That's why we have just adopted -- and it will be applicable in 2003 -- we have just adopted a regulation that obliges these operators to have single [internationally uniform] certificates in Europe that prove these drivers are perfectly legal and are paid with the salaries that are in the different European countries and [that abide by] their respective social conditions."

Employment and social affairs spokesman Fielding says the truckers' case has implications across many areas of policy in the European Union. "In fact, this issue is the crossroads between transport policy, employment policy and correct functioning of the single market -- single market policy -- and any number of other subjects. It's interesting, complicated and pretty vital."

Fielding says that the European Parliament can codify behavior that all the member nations agree to but that nothing the EU can do as a body actually will enforce the law and regulations.

"It's the member state where, in a sense, the buck stops. The member states individually are responsible under the EU treaty to make sure that community law means something at the grassroots level."

Fielding says that the European Commission has taken steps to measure the scope of the gray market problem. It has appointed a team of experts to produce a report quantifying the losses in taxes and the threats to health, safety, welfare, and fair competition of shadow businesses. He says the report is due for publication later this month.